Truce in the Pension Wars
Can Public Pensions Be Fair to Later Generations?
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  • Boritz

    “given sufficient discipline and scrutiny”

    This was a practical approach for our great-grand parents, not for us.  You may as well say: given a sufficient pot of gold at the end of the rainbow.

  • Corlyss

    “Is an honest, fiscally sound, publicly administered pension plan possible,”

    Here’s the deal: people either save for retirement, or they spend everything they make and then some to support the infamous “consumer economy.” No nation can have it both ways. None. We see the consequences of the post WW2 attitude that consumerism was the answer to thousands of years of economic cycles. It’s essentially a lie. People can have such honest, fiscally sound, publicly administered pensions – the federal government’s civil service has one – but they have to save a lot more than they have, a lot more than they have been willing to save, and a lot more than the economy can stand. That’s why the original lock-box scheme of Social Security was very quickly abandoned – it was taking too much money out of the economy. And let’s face it: there were only two reasons FDR came up with SS: one was to capture a lot of money the administration’s floundering recovery programs and the other was to lash up voters to the “generous” Democratic party forever.

    “are all such efforts doomed to regulatory capture, union abuse, and co-optation by politicians”

    • Andrew Allison

      Of course, as the Dutch have demonstrated, an honest, fiscally sound, publicly administered pension plan is possible. It does, however, require a recognition of fiscal reality on the part of present and future retirees. Given the conspicuous absence thereof in the U.S.A., we can confidently look forward to tears from the pensioner victims.

  • Andrew Allison

    The fundamental fallacy in this argument is that today’s public employee retirees and the unions representing the current ones give a rat’s rear end about their (or anybody else’s) grandchildren, let alone the solvency of the entities which employed/employs them.

  • Anthony

    Public pensions are “the fortunes of those who have no fortune.” Perhaps capitalized pension plans may have to reconfigure in some instances as PAYGO systems (based on principle of intergenerational solidarity – today’s workers pay benefits to today’s retirees in the hope that their children will pay their benefits tomorrow).

    • Andrew Allison

      Intergenerational solidarity doesn’t work because increased longevity and retiree-to-worker ratios mean that there’s less and less revenue to pay more and more pensions. At the end of the day, workers must save for their own retirements, either individually or through fully-funded pension plans. The first step toward fixing the public pensions disaster is to impose the fiduciary and funding requirements for private pension plans. The second is to convince future retirees that their promised pensions are not going to materialize and that they had better start saving.

  • qet

    The only practical solution in the USA is the route being followed by Stockton, CA, and that will require the appeals courts in all circuits to uphold the decision of the district court recently handed down. If more cities file for bankruptcy protection and use federal bankruptcy laws to reduce pension contributions, then we can expect to see some furious lobbying in Congress to change those rules. Municipalities would be wise to file today and take their chances under the current legal regime. The idea that there would be a “mass exodus” of municipal employees, in this economy, is risible.

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